Carpathia Hosting, which owns over 600 servers leased by Megaupload before the government shut down the file-sharing site, has a problem: those servers are worth serious money, but no one is paying the bills.

Megaupload wants the servers back to help with its defense, but with most of its assets seized by the federal government, it can't pay for them. Carpathia would normally wipe the servers and lease them to new clients, but the Electronic Frontier Foundation is demanding that legitimate users of the site be allowed to retrieve their personal data first. The Motion Picture Association of America doesn't want this to happen without assurances that its copyrighted content won't be retrieved and distributed again; besides, it might want the servers for a future lawsuit of its own. And the federal government yesterday announced that the servers “may contain child pornography,” which would render them "contraband" and limit Carpathia's options for dealing with them.

Carpathia originally housed the servers in a Virginia warehouse on which the government executed a search warrant back on January 19. After making forensic copies of selected servers, the government withdrew. Megaupload couldn't pay the bills, so Carpathia says it spent $9,000 a day in rent to house the servers it couldn't reuse. This quickly got expensive, so Carpathia trucked all the servers (at a cost, it says, of $65,000) and stuck them in some empty space it had in one of its own facilities. Now, stuck with all these servers, Carpathia wants a judge to compensate it for all the money it could be making.

The US government insists that the court has no real jurisdiction over the server issue. In a filing made late yesterday, the government argued that the EFF had highlighted an "unfortunate" situation, but one not before the court (even Megaupload's terms of service warned users not to count on the site as a sole repository for files). As for the MPAA, it hasn't even filed a civil lawsuit yet, and courts should not rule on "speculative matters affecting civil lawsuits that have not yet been filed (and may not be filed at all)." As for Carpathia's request for cash, the government suggests it doesn't deserve any. After all, it's free to wipe and re-lease the servers; the government already has its forensic evidence. The entire dispute is merely a "private contractual matter."

Well, sort of. When it comes to selling or renting the servers back to Megaupload—there the government draws the line. It doesn't want the servers to leave the court's jurisdiction and it worries that they could be used for criminal activity. In addition, "the government recently learned from multiple sources that the Carpathia Servers may contain child pornography, rendering the Carpathia servers contraband."

So Carpathia sits on its servers and waits for the judge's order it has requested. Simply wiping the servers could expose Carpathia to angry rightsholders who want the evidence for cases they intend to file, and to angry Megaupload users whose data would be gone for good. But keeping the hundreds of machines idle costs money, and transferring them to Megaupload—the only interested buyer—may not be possible.